Urbaser v Argentina is an important case in the development of host-State counterclaims and the relationship between international investment law and human rights.

The Dispute:

The dispute arose from a concession for water and sewage services in the Province of Buenos Aires. Following Argentina’s economic and financial crisis, the investors alleged that Argentina’s measures affecting the concession violated the Spain–Argentina BIT. Argentina responded not only by defending its conduct but by bringing a counterclaim concerning the investors’ alleged failure to provide the necessary investment and services required under the concession.¹

The significance of the case lies particularly in the counterclaim. Argentina argued that the investors’ failure to adequately invest in and operate the concession contributed to violations of the population’s human right to water.

Tribunal Reasoning:

The Tribunal first considered whether it had jurisdiction over the counterclaim under Article 46 of the ICSID Convention and the relevant provisions of the BIT. It concluded that the counterclaim fell within its jurisdiction, rejecting the proposition that the investor’s consent to arbitration could unilaterally determine the limits of the tribunal’s jurisdiction.²

The Tribunal then addressed a more fundamental question: could an investor, rather than only a State, bear obligations under international law? It rejected the proposition that corporations are necessarily incapable of bearing international obligations. In particular, it reasoned that corporations may be subjects of international law and that international obligations can, in appropriate circumstances, attach to their activities.³

This did not, however, mean that the Tribunal accepted Argentina’s entire counterclaim. The Tribunal distinguished between the State’s international obligation to secure the human right to water and an alleged obligation on a private company to provide that right. It found that the human right to water imposed an obligation of compliance on the State but did not, by itself, impose an equivalent positive obligation on a private company to provide water services.⁴

The Tribunal nevertheless went further. It held that international human rights law could impose negative obligations on private parties. Referring to the Universal Declaration of Human Rights and the International Covenant on Economic, Social and Cultural Rights, the Tribunal reasoned that private actors could be subject to an obligation not to engage in activities aimed at destroying protected human rights.⁵ This was the most significant aspect of the award because it opened a doctrinal pathway for considering investor responsibility within investment arbitration.

The counterclaim ultimately failed on the facts and applicable legal basis. The Tribunal found that Argentina had not demonstrated the specific international obligation that the investors had breached. In particular, the obligation to make the investment necessary to fulfil the right to water could not simply be derived from the general existence of that human right.⁶

Why the case matters

Urbaser is important because it moves the discussion of investment arbitration beyond the traditional structure in which the investor possesses rights and the State possesses obligations. It demonstrates that the applicable law, the terms of the investment treaty and the connection between the counterclaim and the investment can potentially allow a tribunal to consider obligations imposed on investors.

For investment governance, the case raises a particularly important question:

If investment treaties give investors international rights, under what circumstances can the same legal framework also recognise international responsibilities?

That question remains central to contemporary debates about investor accountability, human rights and sustainable investment.

The Tribunal’s reasoning and the particular distinction between positive and negative obligations are reflected in the award and subsequent academic analysis.

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FOOTNOTES

1. Urbaser SA and Consorcio de Aguas Bilbao Bizkaia v Argentine Republic (Award) ICSID Case No ARB/07/26, 8 December 2016, paras 34–37. ↩︎
2. ibid paras 1143–1154. ↩︎
3. ibid paras 1193–1195. ↩︎
4. ibid paras 1205–1208. ↩︎
5. ibid paras 1196–1199. ↩︎
6. ibid paras 1206–1210. ↩︎